Ch. 2 Strategy, organization design, and effectiveness
Organization Management
The role of strategic direction in organization design
• The primary responsibility of top management is to determine an organization’s goals,
strategy and organization design, therein adapting the organization to a changing
environment.
• The direction setting process typically begins with and assessment of the
opportunities and threats in the external environment, including the amount of
change, uncertainty, and resource availability.
• Top management also assesses internal strengths and weaknesses in order to define
the company’s distinctive competence compared with other firms in the industry.
• Defining overall mission and official goals based upon the correct fit between external
opportunities and internal strengths.
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The role of strategic direction in organization design
• Specific operational goals
or strategies can then be
formulated to define how
the organization is to
accomplish its overall
mission.
• Organization design
reflects the way goals and
strategies are
implemented.
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Top management role in organization direction, design, and effectiveness
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Organizational purpose
• Strategic intent means that all the organization’s energies and resources are directed
toward a focused, unifying, and compelling overall goal.
• The mission describes the organization’s shared values and beliefs and its reason for
being.
• Competitive advantage refers to what sets the organization apart from others and
provides it with a distinctive edge for meeting customer or client needs in the
marketplace.
• A core competence may be in the area of superior research and development, expert
technological know-how, process efficiency, or exceptional customer service.
• Operating goals describe specific measurable outcomes and are often concerned with the
short run.
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Typical operating goals for an organization
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Two frameworks for selecting strategy and design
• Strategy: plan for interacting with the competitive environment to achieve organizational
goals.
1.
Porter’s competitive strategies
• Differentiation: the organization attempts to distinguish its products or services from
others in the industry.
• Low-cost leadership: the organization aggressively seeks efficient facilities, pursues cost
reductions, and uses tight controls to produce products or services more efficiently
that its competitors.
• Competitive scope can be broad or narrow. An organization can choose to compete in
many market and customer segments or to focus on a specific market or buyer group.
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Two frameworks for selecting strategy and design
2.
Miles and Snow’s strategy typology
• Prospector: to innovate, take risks, seek out new opportunities, and grow. This
strategy is suited to a dynamic, growing environment, where creativity to separate
the organization from competitors is more important than efficiency.
• Defender: concerned with internal efficiency and control to produce reliable, highquality products for steady customers.
• Analyzer: tries to maintain a stable business while innovating on the periphery.
• Reactor: respond to environmental threats and opportunities in an ad hoc fashion.
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Organization
design
outcomes of
strategy
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Four approaches to measuring organizational effectiveness
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Four
approaches
to
effectiveness
values
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Effectiveness values for two organizations
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Discussion issue on March 23.
• Read the following article and answer the question.
• “From leader to follower: Samsung's agony in the chip battle(Korea JoongAng
Daily, October 15, 2024)”
• https://koreajoongangdaily.joins.com/news/2024-10-15/business/industry/Fromleader-to-follower-Samsungs-agony-in-the-chip-battle/2155582
➢ Among the types of strategies proposed by Miles and Snow, which strategy does
Samsung correspond to? Why do you think so?
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